EU threatens to break up Google’s $200bn ad business

EU threatens to break up Google’s $200bn ad business

Google could be forced to sell parts of its $224.5 billion advertising business after the European Commission found that the tech giant had been abusing its dominant position in the sector.

The search engine business has been accused of conduct that may have foreclosed rivals and enabled the company to charge high fees for its services.

The commission has concluded that a forced sale of part of its advertising business may be required to restore competition after finding that Google abused its position for almost a decade.

Brussels alleged that Google had intentionally distorted the market and warned that requiring the company to change its behaviour rather than sell off parts of its business would be “ineffective”. But it said its conclusions were preliminary at this stage.

Dan Taylor, Google’s vice-president for advertising, said: “Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector. The commission’s investigation focuses on a narrow aspect of our advertising business and is not new. We disagree with the EC’s view and we will respond accordingly.”

European regulators have so far stopped short of breaking up Google and have instead levied the company with billions in fines for antitrust violations. But global efforts to regulate the technology giants have started picking up pace.

The UK competition watchdog is also looking to take action on Google and Facebook’s dominance of the online advertising sector. The Competition and Markets Authority’s new digital markets unit has been set up to stop large Silicon Valley tech companies abusing their market power.

The regulator’s research has found that Google controlled more than 90 per cent of the advertising revenues generated from internet searches in the UK in 2019. Its study on online advertising has also found that Google extracts up to 30 per cent more surplus from advertisers than its rival, Bing.

The watchdog’s report on Google and Facebook’s market power found the online advertising sector cost about £14 billion in 2019. It said advertising added an additional £500 per household to the costs of goods and services and that these prices were “likely to be higher than they would be in a more competitive market”.

The report said: “Google and Facebook were able to emerge, with limited resources, on the back of a good idea, producing new and innovative services that are highly valued by consumers. However, they are now protected by such strong and self-reinforcing incumbency advantages that similar innovation by new entrants is much more difficult.”

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